Alpenhof Pushes for City Council to Participate in Court-ordered Mediation
by Samantha Wright
Apr 12, 2012 | 1459 views | 0 0 comments | 13 13 recommendations | email to a friend | print
<b>OLD DAM</b> - The original Skyrocket diversion dam was replaced in 2010 with an engineered steel and concrete structure. (Photo by Samantha Wright)
OLD DAM - The original Skyrocket diversion dam was replaced in 2010 with an engineered steel and concrete structure. (Photo by Samantha Wright)
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Case Questions Whether Skyrocket Creek Diversion Is Natural or Man-Made Hazard

OURAY - Trying to break out of “your attorneys against our attorneys” mode, property owner Galen Rasmussen appealed directly to members of the Ouray City Council last week to participate in a court-ordered mediation process between the city and Alpenhof LLC.

An ongoing legal battle that pits Rasmussen and his Alpenhof partners against the City of Ouray seeks to determine, among other things, who is responsible for the environmental hazard posed by the city’s 80-year-old Skyrocket Creek diversion system, which passes by the Rasmussens’ property.

According to Rasmussen, both the city attorney and city administrator oppose the idea of having any council members participate in the mediation process.

“Your attorneys informed our attorneys that no member of the city council would participate in mediation, and it would be only (City Administrator) Patrick Rondinelli and the city attorney,” Rasmussen told council. “We do not think this will lead to a solution, and we do not think it is in the best interest of public safety.”

Rasmussen said he would prefer to have one or two council members participate in the mediation process to “see if we can craft a settlement which they can recommend to the rest of council.”

Council did not discuss Rasmussen’s proposal in open session, but did confer with city attorney Kathryn Sellars on the matter during an already scheduled executive session.

The lawsuit dates back to last July, when Rasmussen and his partners and family members who comprise Alpenhof filed a complaint in district court against the City of Ouray and the Ouray City Council after the Ouray City Council denied Alpenhof’s pending application to develop a 10-lot subdivision on a 2.4 acre parcel of undeveloped property (known as Parcel C) within the Ouray Vista subdivision.

The principal contested issue in the application, as stated in the plaintiffs’ brief, involved the potential impact on the proposed subdivision of a water diversion system created by the city in order to handle potential flooding of Skyrocket Creek.

The Ouray City Council was later dismissed as a party from the action.

Skyrocket Creek was historically diverted toward what is now the Rasmussens’ property in 1929 by city forefathers to protect the Ouray Hot Springs Pool and Highway 550 after a catastrophic flood filled the pool with mud and debris.

The creek originates 3,800 feet above Ouray, and plummets steeply and at times violently to the valley floor. Like many of the creeks flowing into Ouray, it is prone to flash-flooding. The Colorado Geological Survey has documented that Skyrocket Creek has one of the highest measured rates of runoff per square mile in Colorado. Its natural course is to the south of what is now the Ouray Vista Subdivision, toward the Ouray Hot Springs Pool and Highway 550, the major route into and out of the City of Ouray.

The city’s diversion system blocks this natural course by means of a dam built across the drainage at the point where the creek would otherwise spill toward the pool and the valley floor. (The original dam structure was severely damaged during a flood event in 2005, and was replaced with an engineered cement and steel structure in 2010.)

Water and debris are re-routed to the north through a 400-footlong notch blasted through solid bedrock, so that any flood event is now directed to the northwest – toward the Rasmussens’ property. The diversion system’s lower channel is separated from the Rasmussens’ property and the rest of the Ouray Vista subdivision by a massive berm, constructed by the City of Ouray.

The Rasmussens say they purchased the property with the understanding that the City of Ouray would eventually allow them to develop it, but events have unfolded otherwise.

Alpenhof’s application for preliminary development approval was recommended for approval by the Ouray Planning Commission with a number of conditions, including armoring the berm and building a new culvert where the creek passes beneath Highway 550, following two public hearings in the spring of 2011. However, the Ouray City Council denied the application last June, citing numerous concerns about the natural hazards and geologic conditions posed by Skyrocket Creek as it passes by the Rasmussens’ property.

In a complaint filed against the City of Ouray and the Ouray City Council in July 2011, Alpenhof’s attorneys Andy Mueller and Mike Hockersmith of the Tisdel Law Firm argued that the hazard created by Skyrocket Diversion’s channelized debris and water as it passes by the Rasmussens’ property is not natural. It is caused by the city’s artificial channelization, they argue, and the city should therefore be responsible for paying for mitigation, so that the Rasmussens can develop their property to its full potential.

Court documents show that Alpenhof also asserted a claim against the City of Ouray for inverse condemnation, alleging that “the city’s denial and construction of its water diversion system constituted a taking of private property for a public purpose for which just compensation had not been paid.”

In its defense, the city, represented by the Masters Law Firm, has claimed that its denial of Alpenhof’s subdivision application was appropriate under its code, which calls for all property owners to be responsible for mitigating natural hazards on their property that could impact public health, safety and welfare, prior to being allowed to develop it.

The city also pointed to a plat note on the 1997 plat submitted for Ouray Vista Subdivision which allegedly states: “Parcel C may not be developed in any fashion unless and until further approval from the City of Ouray” and argued that the Rasmussens were aware of this restriction when they purchased the property.

District Judge Steven Patrick, swayed by the city’s argument, dismissed Alpenhof’s first claim for relief on Jan. 23, 2012. Alpenhof has since filed an appeal, contesting many of Judge Patrick’s findings, including whether the restrictive plat note existed at the time the Rasmussens bought their property.

The second claim regarding inverse condemnation has not yet been resolved.

Rasmussen warned the Ouray City Council Monday that the appeal proceedings could take years and lots of money in attorney fees for both sides. (The city has spent $42,000 thus far in legal fees on the case according to City Administrator Rondinelli; Rasmussen declined to say how much his family has spent on the case so far.)

Rasmussen emphasized that there is a physical solution to the threat of health, safety and welfare that Skyrocket Creek poses in its current configuration, not only to his property but also a hotel and condo units on the west side of Highway 550. He said that he and his family are willing to share the financial burden of implementing this solution with the city.

The Rasmussens directed their attorneys to request mediation to find a way to work together with the city to resolve the issue, but, Rasmussen said, the city attorneys opposed the request. In mid-March, the court then stepped in and ordered mediation.

The parties have 35 days from the time the mediation was ordered on March 15 to inform the court of the mediator they have chosen, and the date of mediation. Mediation must take place within 90 days.

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